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The Outlook for Insurance Asset Management

  • ,  Chief Executive |
  • 16 Oct 2018
  • Updated 18 Oct 2018

Interesting Issues for Insurance Investors

In Aon's 'Evolving Criteria' paper, the authors summarize recent regulatory changes across the globe that have impacted the insurance industry.  So how have asset managers within this industry responded to IFRS 9, Solvency II, and the recent US tax cuts? 

Also, have lower rates encouraged riskier behavior from insurance CIOs and asset allocators?  The below papers look into these issues, the outlook for the insurance asset management industry as a whole, and how insurance managers are utilising currency hedges, ETFs, and senior-secured loans.

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Insurance Edge: Delivering Insights for Insurance Investors (JP Morgan AM, Oct 2018)
This issue of Insurance Edge, JP Morgan's quarterly newsletter for insurance investors, evaluates how IFRS 9 affects insurance asset management and contains insight into the process of measuring book yield correctly. 

A Paradigm Shift in Insurance Asset Management (Spence Johnson, 2017)
Asset managers seeking to win outsourcing mandates from insurers should think of insurance companies as outcome-oriented investors with specific problems to solve, as opposed to product-oriented investors. 

Optimizing Currency Exposures under Solvency II (Neuberger Berman, 2018)
(For compliance reasons, this paper is only accessible in certain geographies)
Under Solvency II, insurance companies with currency mismatches between their assets and liabilities can face solvency capital charges. But what is the optimal hedging practice that mitigates these charges without also affecting returns?

Global Rating Agencies: Evolving Criteria for Insurance Companies (Aon Hewitt, 2018)
This paper summarizes the key global rating agency criteria developments and regulatory changes over the last year for companies within the insurance sector.

Practical Risk Management in Insurance Asset Management (Willis Towers Watson, 2017)
Willis Towers Watson provides the results of a recent survey of UK insurers' operational practices. The survey examined the extent to which insurance companies have been and are still developing their risk functions.

Got it Covered? Insurance in a Changing Climate (AOD Project, 2018)
How did the insurance sector respond to recommendations by the Task Force on Climate-related Financial Disclosures?  The AODP Global Climate Index rates the top 80 global insurers on their assessment and management of climate risks.

ETFs in Insurance General Accounts (S&P Dow Jones Indices, May 2018)
S&P Dow Jones Indices surveys the breadth of ETF usage in insurance company general accounts.

Outlook for Insurance Investors: New World Order (KKR, Apr 2018)
KKR presents the findings from their survey of insurance industry CIOs. Lower interest rates and tighter spreads have made asset allocation more challenging, causing CIOs to increasingly look towards non-traditional investments.

How alternative capital is shaping the global reinsurance industry (Milliman, 2017)
This Milliman report looks at the effects of the ballooning amount of alternative capital (from pension funds and SWFs) that has been injected into the catastrophe reinsurance industry in recent years.

Growth Readiness for Insurers: Capturing Opportunity through Technology (State Street)
State Street suggests 3 key ways for insurers to grow both their customer base and investments: realigning their digital strategy, rethinking their investment models, and strengthening client engagement.

Sub-investment grade opportunities for insurers: Senior secured loans (Invesco, 2017)
(For compliance reasons, this paper is only accessible in certain geographies)
This primer on senior secured loans explains everything from how they are structured, to how they are treated within Solvency II, their historical performance, and why different types of insurance firms may wish to consider them.

Solvency II encourages risk-seeking behavior (Robeco, Oct 2017)
This brief article from Robeco suggests potential amendments to Solvency II regulation that address some of its unintended consequences.

Economic Capital for Life Insurance Companies (Society Of Actuaries, 2016)
What are the drivers of economic capital calculations for long-term life insurers? This paper discusses EC frameworks and the ways that long term life insurers are unique.